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CFPB Report:  July 22, 2020

The Bureau's Budget and Funding Processes

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The Bureau is funded primarily through transfers from the Board, averaging $487.1 million a year from FY 2012 to FY 2019. We chose to review the Bureau's budget and funding processes.

We determined that the Bureau designed and implemented controls over its budget and funding request processes and the Board designed and implemented controls over the funds transfer process to fulfill the agencies' respective responsibilities outlined in the Dodd-Frank Act. In addition, the Bureau generally complied with legal requirements to produce certain budget- and funding-related information and report it to certain stakeholders.

Figure. The Bureau's Budget Formulation and Execution Processes

Budget formulation 1. Set guiding principles The director provides guiding principles designed to align the Bureau’s spending with its mission and for divisions to prepare their budget requests in a manner consistent with the strategic plan. 2. Issue division guidance The OCFO issues the annual budget formulation guidance, a timeline, and templates to the divisions before the next fiscal year begins. The templates require divisions to justify each line item in their budget, including which strategic goal and objective it supports. 3. Develop division requests Divisions develop budget estimates using the templates. The OCFO reviews the estimates, compares them with historical data, and coordinates further justifications or changes. Divisions then submit final budget requests to the OCFO. 4. Develop agency budget The OCFO consolidates the division budget requests into an agency budget and considers the annual funding cap established by the Dodd-Frank Act. The chief financial officer sends a budget memorandum through the chief operating officer to the director. 5. Approve agency budget The director reviews the agency budget, including division priorities and justifications, and the OCFO works with the divisions to respond to questions and feedback and revise the budget as necessary. The director approves the agency budget. 6. Distribute division budgets The OCFO distributes approved division budgets. Each division is allocated a target staffing headcount and personnel and nonpersonnel funding for the fiscal year. Divisions are expected to adhere to allocations, but can work with the OCFO throughout the fiscal year to request additional funding or staffing. Budget execution 7. Conduct midyear reviews The OCFO conducts midyear reviews to assess the agency’s financial position, including unfunded needs and surpluses, and to facilitate budget adjustments. The OCFO issues midyear review guidance, a timeline, and template and requires divisions to justify any requested increases or decreases to their budget. The OCFO coordinates with the divisions and develops a revised agency budget. 8. Approve revised budget The OCFO works with the director to review the budget adjustments and approve the final budget. Divisions operate using their revised budgets for the rest of the fiscal year.

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